Tuesday, June 24, 2014

If Your Fire Insurance is Canceled

When the Cocos fire was raging a San Diego resident whose home was in danger was surprised and happy you receive a phone call from his insurance company. The company representative told him that the company had a mitigation team in the vicinity and that it offered a free service wherein they try to protect the homes of their policy holders. The fire did not damage the resident’s home, but he was happy and thankful that the insurance company had been so proactive in protecting the interests of its policy holders.

What happened next was a shock to the man. A week later, he received another phone call from the insurance company. The representative told him that his home was classified as being in a wildfire area and because of this the company had decided not to renew his insurance policy. The homeowner, who in the past 10 years had never filed a claim on either his home or car insurance policies, felt let down. He felt that after accepting premiums totaling about $25,000 over the 10 year period, the company dropped him like a hot potato.

It’s Legal

According to the State Department of Insurance, what the insurance company did is not unusual. When an area is designated as a high fire danger region, insurance companies, especially those with a lot of exposure in these areas, move to limit the number of policies they issue. Like all businesses, insurance companies cannot survive without making profits. And one way of doing this is by reducing the risks and the possibilities of huge payouts. No one can argue with this logic.

But there’s more to it than logic. The homeowner was never told earlier that his home was in a high risk area. The company took his money for 10 years without hesitation. He was never told why things had suddenly changed. And worst of all was the timing of the news. It came just one week after the first phone call saying that the insurance company was going the extra mile to protect him. The decision not to renew the policy is legal and from the insurance company’s point of view, makes sense. But is it fair?

If it Happens to You

The relationship between an insurance company and its policy holder is a business one with the company wanting to make a profit from the policy and the policy holder expecting protection from loss. For the policy holder there is also the feeling of security that comes from being insured, a feeling that grows as renewals come and go without a hitch. To have it suddenly withdrawn can leave the homeowner feeling very vulnerable. If this happens to you, there are some things you can do about it.

You can take steps to reduce the fire risk and then appeal to the insurance company to reconsider this decision. The insurer may change its mind and renew the policy. If not, there are other insurance companies that you can contact. The best thing to do is to talk to an insurance broker that represents a number of insurance companies. This will allow you to get expert advice and compare coverage options to find the policy that best suits you.

And if you think that your policy has been wrongfully canceled, you can call the State Department of Insurance and the agency will investigate to see if the insurer has followed the correct procedure in the matter.

Insurance by Allied Brokers has been functioning in the industry for over 50 years and we work with a wide selection of major carriers across California. If you have questions about your insurance policy, don’t hesitate to call us at (650) 328-1000 or visit us at http://www.alliedbrokers.com/

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